Hi all,
So far our portfolio has been built with residential CF+ IP's on regular residential IO loans.
I'm about 2/3's through "0 to 130+ properties in 3 years", and am considering adding some commercial properties to the portfolio. I'm also considering using my company or trust as the vehicle.
If anyone can help, my initial questions are:
1) Previously when I've borrowed in a company or trust, the interest rate has been higher, even though personally guaranteed. Does it have to be this way?
2) Should I be sourcing a different form of finance for commercial properties, or is it still a basic mortgage product that I'm after?Any thoughts/opinions would be appreciated.
Daedalus.
Hi Daedalus
For commercial property there should not be any rate difference if using a company or trust. AS with domestic mortgages there does not have to be extra charges it is lender dependent.
If you have sufficient equity you can utilise a basic mortgage however if using commercial property as security then the loan structure is specialised.
Lending amounts are limited depending on the building style up to a maximum of 85% LVR
The costs can be higher depending on the building value especially with valuations and don't forget that GST is applied over the purchase amountRegards
Craig
As Craig has mentioned most Commercial transactions are done with clients using a Pty Ltd Company As Trustee structure so lenders are used to this form of borrower more so than the standard residential deal.
Whilst many lenders will offer you residential rates if you offer residential security there are many competitive Commercial deals around at present so rate should not be too much higher even where commercial security is being offered.
In some cases where the security is specialised the lender will ask for a higher deposit but again with available equity in another security 100% funding is available.
Richard Taylor | Australia's leading private lender
Good onya ,
Commercial I. P 's are great , less stress to look after it , GST is returned to you when you do BAS . claim form , from the
purchase and from rents and expenses later on .
Also Comm bank would not let me use residential IP for security on commercial purchase and vice versa.They allowed a
temporary short term small LOC on the residence to assist with settlement etc.All the best .
Interesting, thank you people!
Having done a little scouting around, I'm surprised that the yields on commercial property are almost as low as resi in some areas. Are yields generally better on certain types of commercial? I'm also yet to find some really good resources to find properties. The Internet resources seem more limited for Commercial than for residential – or am I barking up the wrong tree?
Are there any good books out there on Commercial that you'd recommend?
Cheers
Daedalus
Have a look at http://www.gal.com.au Chris Lang who runs the business has published a well known book on commercial property, there is also some free info on the site.
Regards
AlistairBrilliant! Thanks Alistair,
Daedalus.
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